What is Cost per Hire?
Cost per hire is the total cost of filling a role divided by the number of hires in a period. Include advertising, recruiter fees, interviewer time and onboarding; state which you included. Tracking it by role or source shows where hiring money goes and lets you compare channels fairly over time.
Formula
Cost per hire = (internal hiring costs + external hiring costs) divided by the number of hires in the same period.
| Internal costs | External costs |
|---|---|
| Recruiter and interviewer time | Job advertising |
| Referral bonuses | Agency or recruiter fees |
| Onboarding and equipment | Background checks and assessments |
| Hiring-team software | Travel and relocation, if any |
Rules for a fair number
- Pick one period, such as a quarter, and count hires and costs from that same period.
- Say which costs are in and which are out, so next quarter's figure compares fairly.
- Split by role family. Senior roles and entry-level roles cost different amounts, and a blended average hides that.
- Pair it with quality of hire, because a cheap hire who leaves early is not a saving.
What it does not tell you
A single figure does not say which channel works best. Track it by source, for example referrals, job board postings and recruiters, then compare with time to hire.
Example
If a company spends the equivalent of USD 30,000 on hiring in a quarter and hires 10 people, cost per hire is USD 3,000.